TASHKENT
Fitch Ratings has assigned Uzbekistan’s Joint-Stock Commercial Mortgage Bank Ipoteka Bank’s 785 billion soums ($74.4 million) Eurobond placement due in 2024 a final rating of ‘BB-’.
The issue is denominated in Uzbekistan soums, but all settlements are in U.S. dollars using the exchange rate set by the Central Bank of Uzbekistan at each settlement date. The bank is using the proceeds mainly for extending local currency facilities to local borrowers in Uzbekistan.
The assignment of the final rating follows the receipt of documents conforming to information already received. The final rating is the same as the expected rating assigned to the unsecured notes on 7 April 2021.
The notes’ rating is in line with Ipoteka Bank’s long-term foreign currency Issuer Default Rating (IDR), as all settlements are in U.S. dollars. The notes represent direct, unconditional and senior unsecured obligations of the bank, which rank pari passu with its other senior unsecured obligations.
Ipoteka’s ‘BB-’ IDR is driven by Fitch’s view of a moderate probability of support from the government of Uzbekistan (BB-/Stable). This view considers Uzbekistan’s moderate ability to provide support as well as a high propensity to support Ipoteka based on its majority state ownership, as well as the potentially low cost of support relative to the sovereign’s foreign-currency reserves, and a record of support for the country’s public-sector banks that dominate the banking sector.
In 2018-2020, Ipoteka Bank, Uzpromstroybank, National Bank as well as Uzbekistan’s government issued international bonds and attracted US$2.65 billion from foreign investors.
Uzbekistan is making efforts to improve its investment climate after more than two decades of economic isolation. The closed, autarkic system viewed most foreign investments as a threat. That ended when Islam Karimov, who had led Uzbekistan since before the Soviet breakup, died in 2016.
Current President Shavkat Mirziyoyev, once a prime minister under Karimov, has made attracting foreign investors one of his top priorities in an increasingly ambitious plan to open Uzbekistan to the outside world.